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 user 2005-04-04 at 10:56:00 am Views: 146
  • #29190

    Xerox Launches “Solid Ink” Strike in Color MFP


    Color, color everywhere, but nary a drop of ink in the office. Until now, the
    makers of color inkjet printers and MFPs have tried valiantly over the years to
    penetrate corporate installations that use laser devices, but enterprise markets
    have not adopted them enthusiastically. Why? Perhaps it is a penchant for what
    is tried and true, a historical bias that inkjets cannot perform with the same
    speed, quality and low cost that laser devices deliver. We would argue that it
    is because the right value proposition has not been demonstrated.

    How does a manufacturer change perceptions that have been ingrained over
    time? By creating a value proposition so large that the impact left behind may
    alter the landscape of the color MFP markets for years to come. The newly
    released Xerox C2424 is that product and solid ink is the catalyst that powers
    it. The C2424 will enter an uncontested space in the color MFP segment between
    $1,000 and $4,500. Its closest competitors are the Canon MF8170c, C2500 and
    C3500, none of which match up well in terms of price, speed and functionality
    with the new C2424.

    Existing Market:

    Inexpensive desktop inkjet models with low upfront capital costs and
    correspondingly high running costs have been available for many years. These
    products have worked well in the small office and home office (SOHO)
    environments where page volumes are low and the total cost of ownership (TCO) is
    not a concern. At the other end of the spectrum, workgroup/departmental color
    MFPs with powerful copier engines have been characterized by extremely high
    capital costs (ten to 100 times those of their inkjet equivalents), yet low
    running and subsequent TCOs, when they produce significant monthly page volumes.

    However, a gaping hole has existed in the low- to mid-volume workgroup color
    MFP space. The market has been waiting for a color MFP that blends accessible
    capital costs with running costs that are on par with those of
    departmental/workgroup MFPs. Last year, Canon attempted to fill the space with
    the first $1000 desktop color laser MFP targeted at the small and medium
    business (SMB) and SOHO markets. However, the gap between $1,000 and $5,000
    machines remained. The Xerox C2424 is a landmark product priced between $2999
    and $4399 (depending on configuration), which will fill that gap. The C2424 will
    provide new opportunities for small and midsized workgroups looking for high
    speed, high quality color output with relatively low capital costs.

    Product Overview:

    The Xerox C2424 will come in three versions: the WorkCentre C2424DN, the
    WorkCentre C2424DP and the WorkCentre C2424DX. The $2999 base model is designed
    for the desktop and comes with 256MB of RAM standard, 300×300 scan resolution
    and a maximum sheet capacity of 625. The C2424DN model adds an additional
    525-sheet feeder, a storage cart, 600×600 scan resolution and an additional
    256MB of RAM for a price of $3799. The $4399 top level DP configuration offers
    the previously mentioned features and a ScanSoft software bundle that includes
    PaperPort Pro 12.0, OmniPage Pro 12.0 and Image Retriever. The software bundle
    provides optical character recognition (OCR) and scan-to-file capability,
    features that are usually reserved for high-end departmental MFPs. The C2424 is
    capable of scanning at 20 pages per a minute and is rated at 24 page per a
    minute (ppm) for both black and color. The first copy out time is a speedy 15
    seconds, however, the nature of solid ink requires that the machine be warmed up
    each day or left on.

    Competitive Models in the Marketplace:

    The Xerox C2424 is a perfect “tweener” for the workgroup segment. It is a
    compact, affordable model with high-end functionality and print speeds that will
    adequately support mid-size workgroups.

    The Canon MF8170C color laser MFP is better suited for small office
    environments with occasional color requirements even though it lacks network
    scanning, duplex printing and the speed to adequately service the workgroup
    environments. The functionality of both the Canon C2500 and C3500 color laser
    MFPs is closer to that of the C2424 series, but the Canon machines are
    significantly more expensive and have bulkier, modular designs that take up more
    space than the integrated, space-saving C2424. Despite the impressive scan-to
    functionality and 2,000-e-mail address books of the C2500 and C3500, the C2424
    trumps the two machines in terms of standard memory and print speed.

    The Lexmark X762e color laser MFP is also a modular device that comes at a
    higher price point than the C2424. The C2424’s 85,000-sheet monthly duty cycle
    is comparable to the X762e’s 100,000. Further, the two machines’ paper
    capacities and memory seem in line. However, the C2424 does not offer fax
    functionality, a drawback when it is compared to the fax-ready X762e. SMB
    verticals with high color volume and fax requirements will have to look
    down-market to the MF8170C or up-market to the X762e, depending on their
    document management requirements.

    The C2424’s solid ink technology promotes ease of use and efficiency as
    customers can replace ink sticks while the machine is in use. Solid ink printing
    is also environmentally friendly, a fact that will be particularly attractive to
    “green” consumers in Europe. In terms of graphics, solid ink will produce images
    that are among the most vivid in the workgroup segment. The images will not be
    durable or sharp enough to frame on your office wall, but the technology is
    ideal for producing colorful marketing and advertising collateral for
    short-term, disposable use.

    Market Impact:

    The C2424 will create new markets of opportunity for Xerox, specifically in
    vertical markets like real estate, retail and finance where SMBs with high color
    volume requirements are prevalent. These segments will be able to utilize solid
    ink’s traditionally glossy, color-rich images in marketing materials, pamphlets
    and brochures. However, by entering the $1,000 to $4,500 workgroup space with a
    color MFP that offers 24 ppm mono/color speeds and network scanning, Xerox will
    unwittingly create fallout.

    First, traditional workgroup and departmental MFP vendors such as Canon,
    Ricoh, Toshiba, Sharp and Konica Minolta will not stand idly by. Instead, they
    will put increased pressure on the lower-end workgroup market with competitive

    Second, color laser printer manufacturers such as Kyocera Mita, Okidata,
    Lexmark, Brother, Epson, HP and Dell are hungrily eyeing this space and are
    likely to move up market by offering MFPs based on color laser print engines.

    Third, these future offerings will likely offer speeds that are equal to or
    higher than the current 24-ppm milestone set by Xerox.

    Fourth, eventual competitors of the C2424 will feature lower price points and
    superior feature sets, diminishing differentiation between mid-workgroup and
    departmental MFPs.

    The final and most important ramification of the ground-breaking C2424 will
    be that workgroup models and high-end departmental color MFPs will cannibalize
    each other’s sales once end users warm up to the new mid-workgroup segment.
    High-end color MFP devices are high revenue and high profit devices;
    cannibalization of departmental color MFP unit sales to newer low cost
    mid-workgroup products will lower profits and revenue as overall unit volumes


    Are the potential consequences listed above indicative of a future with
    falling average selling prices, revenue and net profits? Not necessarily.
    Initially, low hardware price points and equivalent running costs will increase
    demand for the mid-workgroup color MFP space. Decreasing hardware prices will
    lead to share gains for color MFPs, and manufacturers will benefit from color
    supplies revenues that are on average four times those of black-and-white

    The challenge will come when the market becomes overcrowded. Success will
    depend on how well manufacturers differentiate and segment markets with their
    disparate product lines, and how their products are perceived by the end user.
    In the near term, the C2424 will be a boon for Xerox as its two-tier and dealer
    distribution will provide easy access, and its high cost-benefit ratio will
    provide significant value to end users. In five years, we may look back and say
    the launch of the C2424 signified the beginning of intense competition between
    low, mid-workgroup MFPs and departmental MFPs and the subsequent decline of
    revenue and profit for the MFP category.